How does money laundering work in a real estate investment firm?

38 Replies

I AM NOT ASKING FOR ADVICE ON HOW TO DO ANYTHING ILLEGAL! Lol.

I used to know someone whose dad owned a real estate investment firm that had 5.5 billion of assets.

They told me that there is a lot of money laundering that goes on.

How exactly does this work? Who launders it and how? If I had a business like that, I would think I would keep track of everything so that nothing is stolen.

I hope this isn't against the forum rules. I'm not asking for advice on how to do this, I'm just wondering how it works and how it happens.

Originally posted by @Jay Hinrichs :

read up on the mob  and drug cartels  

Is all money laundering related to drugs? I've seen "Breaking Bad," I know what it is... but I wasn't under the impression that it was related to drugs. I could be wrong, though.

I thought it was just fraudulent transactions.

So could you give me an example of a money laundering transaction?

Nope   have no first person experience at it .. Nor do I believe anyone I have done business with through out the years was laundering money.. I am sure you can simply google the subject and get read up on it.. seems like an odd topic for BP frankly

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

read up on the mob  and drug cartels  

 Here's an excerpt from a money laundering site from the Dept. of Treasury, Financial Crimes Enforcement Network (FinCen)....

"The following examples illustrate suspicious commercial real estate transactions or activities likely conducted to facilitate money laundering.

1. A U.S. bank reported that funds were being transferred between several real estate- related accounts in a circular fashion for no apparent legitimate reason. The accounts were linked by common account signers. Several businesses were involved, and they were all located at the same address and had the same account signers. Various news articles indicated that these companies had been involved in alleged real estate fraud.

2. A U.S. bank reported that a real estate investment company located in the eastern part of the United States made multiple cash deposits within a five-week period in amounts that totaled almost one million dollars. During this same period, the company sent wire transfers to and received wires from a single company located in the western part of the United States. In total, the wires involved amounts that approximated the cash deposits.

3. A U.S. bank reported that over a two-week period, a real estate investment company used cash to purchase numerous cashier’s checks. Most of the checks were purchased for amounts just under the $3,000 recordation threshold6. These checks were deposited to an account in the name of the check payee at the filing bank. A review of bank records showed that this account also received deposits composed primarily of numerous cashier’s checks sold by another bank (most issued in amounts near the recordation threshold). Bank employees reported that at different times an account signer would identify himself by presenting driver’s licenses from different states bearing significantly different names, and signatures executed in significantly different handwriting styles"

.... I have to go do something else. I will have to take a look at this later so I an see what they're talking about.

You'd need to be pretty tax savvy, or at least more so than I, to determine if the example I'll give would make sense tax-wise.

And I am making this example up....

Years ago I desired to own a bar. Which, is odd because I don't drink or even like to hang out in bars. The reason I wanted to is because of the stories I heard of how much money people were losing to "cherry master" machines. I wanted to be the guy who OWNED the machines and back then they were illegal but not enforced (strictly enforced now).

So let's say you owned a bar or any other business that generates decent chunks of actual cash. More than you could spend on everyday expenses. You could use other funds or borrowed money to purchase properties and use all your "cash" for the rehabs and or repairs.

You'd miss out on the write-off/depreciation of those repairs/improvements but save on paying the taxes on the "cash".

Maybe a good example, maybe not. Again, its just a made up example.

No, not really a good example and I'm not giving you any!

Regardless of your claimed intentions, the question promotes ways of doing illegal dealings, doesn't even belong on BP!

People are not so stupid that they can't read between the lines.  

Hello ADMIN!  :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

Originally posted by @Jay Hinrichs :

read up on the mob  and drug cartels  

 I guess it does have to do with drugs. That's weird, though... Why would the owners of large real estate companies knowingly take proceeds from drug trafficking? Why would they need it or disk anything?

*risk

Originally posted by @Jay Hinrichs :

@John Farmer  because they have a criminal bent.. watch american greed

 Wtf, though... They make billions and have families and children. Why would they risk jail time?

Originally posted by @Bill Gulley :

No, not really a good example and I'm not giving you any!

Regardless of your claimed intentions, the question promotes ways of doing illegal dealings, doesn't even belong on BP!

People are not so stupid that they can't read between the lines.  

Hello ADMIN!  :)

 I would never risk jail time by doing that.

But I just read that money laundering doesn't have to be related to drugs. It can be fraudulent transactions and other financial crimes.

money laundering..?? bad idea and you'll end up in jail, but.. um, the onion router and bitcoin.. But, I didn't say that and I don't even know what it means..  :-)

Money laundering is not limited to drug trafficking income, it's just one of the larger and more common illegal business that results in dirty cash. I imagine those that deal in prostitution, stolen merchandise, fake merchandise and illegal gambling may also launder their money.  

Medium holton wise property group logo jpegJames Wise, The Holton Wise Property Group | [email protected] | 216‑661‑6633 | http://www.HoltonWisePropertyGroup.com | OH Agent # 2015001161 | Podcast Guest on Show #127

hmmmm....yesterday felix ...the guy that lives in the general vicinity of "another guy" that robbed a bank...and then felt compelled to change his pic on BP...and today...money laundering.........goodness.......guess the 17 page threads about illegal wholesaling just got  boring:)

No company avatar mediumJohn Thedford, John Thedford | 239‑200‑5600 | http://www.capehomebuyers.com | FL Agent # BK3098153

They busted a landscaper around me 3 or 4 years ago . He set up a grass cutting company , all his deposits were cash . Couple thousand a week . They followed him around with his mowers on the trailer . He made stops but never cut a lawn .  He was dealing 

Originally posted by @John Thedford :

hmmmm....yesterday felix ...the guy that lives in the general vicinity of "another guy" that robbed a bank...and then felt compelled to change his pic on BP...and today...money laundering.........goodness.......guess the 17 page threads about illegal wholesaling just got  boring:)

What are you talking about? Yea, I know money laundering goes on at this multibillion dollar real estate firm.... which I will not name and I am not employed by them.... but I don't know if it is related to drugs or just referring to financial fraud. I know that they don't own any casinos and why would a billionaire derive profits from prostitution?

@Account Closed

Accepting suspicious money from anyone and investing in real estate. Accepting known money from illegal sources. Feds will use "common man" theory to convict you for doing either. (Would a common man understand that the $1,000,000 wasn't from selling lemonade on the corner) Biggest defense is to know your customer or investor, have them source their funds, and document discussions with investors regarding their transfers. Hope this helps.

 I used to own a public accounting firm and we were taught thru continuing education by the local BAR Association what to do and not to do. Of course, we didn't have client privilege either so we had to be careful on what we learned. Did not want to be involved with an after the fact "conspiracy to commit" violation. Easy to do if you focus on the money and not on the character of the person with the money.

Medium tetra homes update 50Bill Pohl, Tetra Homes, Inc. | [email protected] | 513.988.3700 | http://www.tetrahomes.com

Originally posted by @Bill Pohl :

@John Farmer

Accepting suspicious money from anyone and investing in real estate. Accepting known money from illegal sources. Feds will use "common man" theory to convict you for doing either. (Would a common man understand that the $1,000,000 wasn't from selling lemonade on the corner) Biggest defense is to know your customer or investor, have them source their funds, and document discussions with investors regarding their transfers. Hope this helps.

 I used to own a public accounting firm and we were taught thru continuing education by the local BAR Association what to do and not to do. Of course, we didn't have client privilege either so we had to be careful on what we learned. Did not want to be involved with an after the fact "conspiracy to commit" violation. Easy to do if you focus on the money and not on the character of the person with the money.

If I knew that money laundering was going on and wanted to report it to the authorities, who would I go to:

I can think of.... FBI, ICE, and Treasury Dept.

I'm not an attorney but if you have PROOF and not just suspicion, then take your proof to the FBI. I have also heard that it is important to make sure you have clean hands as the first level of conduct is for them to assume you are involved as well and are reporting because of some "falling out" with the target. So properly reflect on your conduct as some things have unintended consequences.

Medium tetra homes update 50Bill Pohl, Tetra Homes, Inc. | [email protected] | 513.988.3700 | http://www.tetrahomes.com

Originally posted by @Bill Pohl :

I'm not an attorney but if you have PROOF and not just suspicion, then take your proof to the FBI. I have also heard that it is important to make sure you have clean hands as the first level of conduct is for them to assume you are involved as well and are reporting because of some "falling out" with the target. So properly reflect on your conduct as some things have unintended consequences.

 I know it because I knew a child of the owner. I was told firsthand that money laundering goes on on a daily basis. What do you think it would take to get them to do an investigation? How much evidence would I need to provide them because all I have is word of mouth from the family member that I used to know personally. I am 100% positive that it goes on.

op still seems to be confused as to what laundering is. It is paying taking money derived from illegal sources and funneling into a business through cash or illegitimate deals(saying you sold 1000 beers but you really sold 100), or on the other end adding value to an asset to be sold (paying under the table for improvements on your property, and recouping it on the sale). That's how a regular company engages in money laundering. I think a bank would just transfer money for them and make it appear like it's from a legitimate corporation or something like that. 

Legitimate companies and banks engage in this behaviour all the time with organized crime because they get a piece of the $ and they are often run by greedy sociopaths. When the megabanks do it they get a fine not even totalling up to their proceeds from the illicit behaviour and no one goes to jail. See hsbc they were recently convicted of laundering billions for Iran, drug cartels and terrorists groups.

I wouldn't snitch on such a powerful person/entity, bad things happen to good people. 

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